Hello, dear friend, you can consult us at any time if you have any questions, add WeChat: daixieit

ACCT2001 Taxation - Term 1 2022

Assessment 1 Income tax return

In this assignment, you are provided with a case study for a client (below) and you are required to prepare workpapers and an income tax return for the client.

This assessment covers Modules 1 to 4 and assumes that you have completed all activities and tasks for these weeks. This is an individual assignment.

Submission requirements

For this assessment, you are required to progressively complete 2 tasks which are due progressively at over 3 weeks. Please ensure you follow each weekly instruction carefully for what you need to do and the submission requirements for each task.

1.   Complete a set of work papers for the income tax return using the excel template provided in the assessment tasks and submission section of the  unit’s  MySCU site. Your whole excel document with the required sheets completed needs to be submitted progressively in Weeks 2, 3, and 4.

2.    Use the ATO forms provided to prepare a manual income tax return for 2020/2021. Submit the completed tax return in PDF format . This must include the completed tax return and all accompanying schedules and estimates, using the submission link provided in the assessment tasks and submission section of the unit’s MySCU site.

Key assessment details

Assessment task

Case study

information

required

Due date

Mark allocation

Marking rubric/mark allocation

Task 1:                   Completion of excel workpapers for income

General case study information Income related information

18 March 2022

2 marks

Submitting workpapers on time (no extensions)

Completion of excel workpapers  for deductions and rental property

Expenses case study information

Rental property related information General case study information

25 March 2022

3 marks

Submitting workpapers on time (no extensions)

Finalisation of excel workpapers for tax payable

All of the case study information

1 April

2022

5 marks

Presentation and

organisation of

workpapers:

5 Excellent - extremely thorough with only 1-2 items missing

4 Good - comprehensive     but could be more detailed in sections

3 Reasonable attempt but more detail to support      decisions required

2 Reasonable in sections      but more research required to arrive at correct conclusions

0/1 Poor - insufficient detail to support decisions

Task 2:                    Completion of income tax return based on excel workpapers

1 April

2022

15 marks

Based on accuracy of amount and completion of items in the actual     completed tax return.

GENERAL CASE STUDY INFORMATION (required for all submissions)

You have been asked to prepare the 2020/2021 individual tax return for Diana Adamson. Diana is the sole managing director of the business Activeleaf Pty Ltd, which operates 20 retail outlets located throughout Australia selling active wear. The company’s shareholders are Diana and her husband Bruce. Diana and Bruce both have equal shareholding in the business and the company is considered to be a base rate entity and an SBE.

Bruce does not work in the company and is employed by another business full time as a plumber. His annual salary for the 2020/2021 financial year was $250,000. The couple have three school aged children Anne, John, and Angus.

Diana’s date of birth is 29 March 1985 and Bruce’s is 16 April 1980.

Diana has health insurance for the family and this policy was taken out with BUPA on 1 October 2020. The premium paid for up until the end of the year totalled $1,450 after a rebate of $120 was claimed. The policy number is BUP862599 and BUPA have notified Diana that the benefit code is 30.

Diana completed her university education 4 years ago and has an outstanding HELP debt of $3,000 as at 30 June 2021.

Diana’s TFN is 999 999 523 and she lives in 25 Chesterton Street, Spearwood, WA, 6163.

INCOME RELATED CASE STUDY INFORMATION (required for the Task 1)

This information, together with the general case study information, is to be used to complete the first part of the submission for Task 1, where you are required to submit your excel workpaper template with the income sheet completed.

Diana is paid a salary by Activeleaf Pty Ltd. The STP summary for 2020/2021 issued by the company for Diana contains the following details:

Activeleaf Pty Ltd – ABN Name

Gross payments

Tax Withheld

98 111 122 223

Diana Adamson

$95,000

$22,500

Activeleaf Pty Ltd made the following payments during the financial year on behalf of Diana:

•   Additional  superannuation  contributions  of  $2,000  were  paid to  Diana’s  superannuation account from her before tax pay. That is, her salary package was $95000 plus SGC plus the additional super of $2,000.

•   Telephone payments in the amount of $1,600. The phone is held in Diana’s name and 50% of the expense relates to phone calls made relating to Activeleaf Pty Ltd.

Activeleaf Pty Ltd paid a fully franked dividend of $30,000 on 1 April 2021. This dividend paid by the company to the two shareholders was used by Diana and Bruce to pay down their mortgage that they have on their family home.

Diana also has a share portfolio shown in the table below.

ASX code

Original

purchase

date

Number of shares

Original

purchase

price per

share

Notes

ADH

20 May 2012

1,900

$2.53

NAB

2 Mar 1985

2,000

$2.90

CBA

31 May 1997

2,500

$10.50

WOW

29 Aug 2008

1,500

$1.00

Were acquired from her sister for $1 per share but the market          value at the time of purchase was $15.54 per share.

During the financial year  Diana  received the following fully franked  (use  30% tax  rate)  dividend amounts: $1,000 on her shares in NAB and $900 on her shares in CBA. Rather than taking the dividends in the form of cash, Diana elected to participate in the dividend reinvestment schemes offered by the companies and acquired an additional 16 shares in NAB, and 9 shares in CBA. Diana also received $300 in dividends from WOW, paid to her as a cash dividend.

Diana sold her shares in ADH on 1 October 2020 for $2.57 each and her shares in WOW on 20 June 2021 for $15 each. The brokerage fees in relation to the sale were $110 each. This amount is inclusive of GST.

EXPENSES RELATED CASE STUDY INFORMATION (required for the Task 1)

This information, together with the general case study information, is to be used to complete the second part of the submission for Task 1, where you are required to submit your excel workpaper template with the deduction sheet completed.

Diana did a short course fashion design course at a cost of $1,200. As a result of taking the course, Diana is now designing her own active wear for the business and selling these to customers.

Diana owns a Toyota Camry motor vehicle. The car was purchased on 1 July 2020 for $35,000. During the financial year Diana travelled 25,000kms. Diana has noted that 70% of her travel is work related,


however she has not kept a log book of the kilometres travelled for work purposes. Diana has paid for all of the running costs during the year and these are as follows:

Fuel

$1,690

Servicing

$1,200

Registration

$960

Insurance

$1,500

Other expenses Diana paid during the year included:

•    Gardening Australia magazine subscription                                                                          $250.00

•    Donation to Red Cross                                                                                                              $350.00

•    Donation to a Go Fund Me page to cover expenses for bushfire victims                        $200.00

•    Membership of Small Business Association of Australia                                                       $97.00

•    Preparation and lodgement of 2020 tax return by MPA Accountants                          $1,250.00

•    Penalties for not lodging her 2020 tax return on time                                                        $200.00

•    Books related to running a small business                                                                            $250.00

•    Payment for life insurance policy that covers Diana’s income in the event of illness or death. The premium is deducted from Diana’s bank account via direct debit each month. Total        premium paid for the financial year was $3,000, of which 75% relates to life insurance and   25% for replacement of income in the event of a serious illness.                                $3,000.00

•    Interest paid on their home loan during the financial year                                          $12,000.00

RENTAL PROPERTY RELATED CASE STUDY INFORMATION (required for Task 2)

Diana owns a unit on the Gold Coast in Southport (9/20 Little Norman Street, Southport, QLD, 4215). She purchased this unit on 10 March 2021 for $460,000. Settlement on the property was on the 7 April 2021. Diana’s niece moved into the unit immediately after settlement and as she is going through a bit of a hard time, is not paying any rent to Diana. The market value of rent in that area is $430/wk. (Hint: You need to research the issues around renting properties to relatives .)

The building was constructed in  1990. A quantity surveyor’s report  provided to  Diana during the purchase of the unit showed the construction cost at the time of purchase as $100,000. This report cost Diana $350.

Diana purchased new roller blinds for the windows at a cost of $3,000 and a washing machine for $529. These items were installed in the unit and ready for use on settlement date. Diana does not elect to use a low value pool for depreciating assets and chooses to use the diminishing value method for depreciation where applicable at a rate of 18.75%. Other costs that were incurred in relation to the property before 30 June 2021 are as follows: